Sports Direct investors rebel against Mike Ashley

Sports Direct shareholders have registered unhappiness with founder Mike Ashley, voting in large numbers against his re-election as director.

Mr Ashley owns 62% of the company, so was overwhelmingly backed to continue in the role as expected.

However, almost a quarter of independent shareholders voted against his re-election.

Sports Direct is under pressure to appoint a new auditor, but shareholders were told no decision had been made.

Mr Ashley has been criticised for a spending spree which has seen Sports Direct buy numerous struggling retailers. His retail empire includes large swathes of the High Street.

He bought House of Fraser for £90m last year saying he wanted to turn it into the “Harrods of the High Street”.

Sports Direct later said it regretted the acquisition, describing problems at House of Fraser as “nothing short of terminal”.

“Sports Direct has been through a very turbulent period and made a number of strange missteps,” Tom Powdrill, of investor advisory group Pirc, said ahead of the meeting.

In particular he noted the House of Fraser acquisition, a delay in publishing its results, and problems appointing an auditor.

Sports Direct’s relations with some investors have been turbulent for a number of years. For example, in 2016 shareholders moved to depose the then chairman Keith Hellawell.

In a statement, Sports Direct said: “Mike Ashley was re-elected… with over 90% of the vote and the audited accounts for the year ended 28 April 2019 were also approved by over 99% of shareholders.”

Investor unrest

Shareholder ISS recommended voting against Mr Ashley’s re-election, citing “material failures of governance and risk oversight, many of which remain unresolved” over recent years.

Fidelity International’s Maike Currie told the BBC that shareholders have questions over the firm’s performance and Mr Ashley’s recent shopping spree. The businessman has bought a number of ailing retailers in the last two years.

Another issue is the appointment of an auditor, after Grant Thornton resigned in August. But the meeting was told that the company is still in the process of finding a new firm.

Mr Powdrill said earlier that if Sports Direct cannot appoint an auditor by the close of the meeting, the Department for Business, Energy and Industrial Strategy has the power to step in if necessary.

Shares in Sports Direct are down by about 25% in a year, and suffered a big drop in July after the Belgian government claimed Sports Direct owed it €674m (£605m) in taxes.

Ms Currie said there were doubts over Mr Ashley’s decision to buy House of Fraser and Jack Wills. There are also reports that Sports Direct is bidding for High Street jeweller Links of London.

Mr Ashley’s recent purchases include, Evans Cycles, upmarket clothing outlets Flannels and Cruise, and lingerie firm Agent Provocateur. Sports Direct is also in the process of taking control of Game Digital.

Earlier this year, Mr Ashley tried to become chief executive of Debenhams, but instead his stake in the chain was wiped out when the retailer was taken over by its lenders.

Mr Ashley has also failed in a bid for music retailer HMV and pulled out of bidding for cafe chain Patisserie Valerie.